Materials you need to run your business just arrived in unacceptable condition, how are you going to deal with the problem of receiving damaged freight?
If you’re running a business that produces physical goods, chances are you’re not only dealing with aspects of shipping, but receiving as well.
Given enough time, having a delivery come through your receiving department with obvious damage is going to happen. It could be from long distance wear and tear, improper packaging, mishandling, or any number of other factors.
As mentioned, receiving damaged freight is an inevitability – it’s a frustrating situation for both parties. The best course is to deal with the problem calmly and professionally, without finger pointing and freaking out.
What remains is knowing the best way to through the freight damage claim process. This will not only go a long way in maintaining relationships, but will get you back on track quickly and efficiently.
Here’s what to do when you’ve received damaged goods. Remember to remain even-keeled, document everything and follow the steps below.
Managing the Freight Damage Claim Process
1. Do Not Turn the Driver Away!
When it comes to carriers and freight contracts, these are your partners. Refusing to accept a shipment, even in a compromised condition, will likely only cost you more in the long run.
You might also be subjected to further shipping costs. Do not turn the driver away, instead, accept the freight, damages and all even though it may seem counter-intuitive.
2. Accept the Damaged Goods
By accepting the damaged delivery, you have the opportunity to thoroughly document the specifics. You can then file a claim, and you’ll likely be duly recompensed. Proper records will help determine whether the claimed damage was the fault of the original shipper, such as poor or inadequate packaging.
If the problem occurred during the carrier’s haul, they’ll be found at fault and will have insurance to cover such losses.
If you do not accept the damaged freight, the carrier will have to send it back to their warehouse and store it as the claim is processed – which costs time, increases the chances of further damage, and potentially leads to further charges. It doesn’t do much for the relationship either.
If you utilize a third-party insurance policy outside of the carrier, be sure that your policy does not have clauses that nullify their responsibility to compensate you if you refuse the freight.
Most insurance policies require that you accept the freight, document everything, take pictures, or even have a claims inspector come by to personally verify the damaged product received.
3. Document Everything
Act immediately and takes notes of any damages or shortages. Check the Bill of Lading (BOL) or proof of delivery (POD) provided by the carrier that they’re accurate.
It’s important to not only makes full records of obvious exterior damage, but consider the condition of the contents. Unseen damages that are not apparent at first glance can be hard to prove if the container is more or less in tact. Therefore it’s prudent to fully inspect and record the condition of the packaging and its contents for any undue harm.
In terms of associated paperwork, the Bill of Lading acts as the carriage contract between the carrier and the shipper. Most claims in the US will rely on U.S.C 14706 as the standard for resolving claims disputes, but freight claim laws differ on a state by state basis, and from country to country.
Because the laws are dramatically different when crossing the northern or southern borders, the point of origin will be the deciding factor on the legal jurisdiction that presides over the claim. For example, if a freight shipment intended for Mexico departs from Canada and is damaged or lost along the way, Canadian claims laws will be used in the resolution process.
Take pictures of the damaged goods. Make sure they’re clear, focus on the damage in context, and support your claims. Once you have taken pictures, contact your carrier or freight logistics company and let them know you received damaged goods.
Keep in mind carriers have a legal right to mitigate the value of their claim. This can be done by allowing them to try to make good on the shipment by re-delivering, salvaging, or returning the goods. Consequently, if you don’t give them their opportunity to mitigate or recoup loss, they may have legal grounds to deny your claim.
The time frame is to file a damaged freight claim is generally two weeks. Some carriers may allow longer claim times, or utilize different methods to prevent missing freight. regardless, the moment you realize you have a claim for damage on shipped goods goods, alert your carrier.
Be diligent in following up, it’s your responsibility, not theirs. Moreover, a properly annotated BOL is regularly used as proof of delivery and condition. Fill it out and then contact the claims department for additional freight claims procedures and paperwork.
It’s also important to be clear in your description of how the external damage instigated further harm to the internal products. There’s a big difference between goods that leave the factory in an already compromised condition, and those that become damaged through handling during the shipping process.
4. Keep the Freight and Packaging
It may be inconvenient to store the damaged freight, but it’s important that you do. Remember, the carrier has the right to inspect the damage in person and the right to salvage the damaged freight. Not allowing them access for inspection could result in only partial compensation or outright denial.
However, in cases such as food spoilage or hazardous materials, disposal laws may supersede the carrier’s right to salvage. Regardless, they still do have to be notified first to give them the opportunity to act.
5. Protect the Freight from Additional Damage
Receiving damaged freight unfortunately means it’s also your responsibility to not aggravate the problem. Store the received damaged goods in a safe place and do everything you can to keep the shipment from suffering further damage.
Put the received damaged goods out of the way of normal operations to avoid having to move it again. By reducing handling, you decrease the odds of further damage.
6. Pay the Freight Charges
There are requirements that claims be filed along with a copy of the paid freight bill. Regardless of who is at fault, refusing to pay the freight bill can hurt your claims resolution.
Moreover, you’ll show a sign of good faith and cooperation by paying the freight bill immediately. Consider this tactic a necessary step towards a full recovery of everything owed back to you.
7. File a Freight Claim Immediately
As with coordinating documentation, filing the freight claim should be done as quickly as possible. According to the Carmack Amendment, a carrier within the United States has to acknowledge a claim within a month of the initial filing.
Subsequently, a written final disposition has to be handed over within a three-month period. Following that, the claimant will have two years to dispute the disposition.
Remember, time in freight claims procedures is not your friend. If you file a claim after the initial claim period, that claim will be automatically voided.
8. Understand Maximum Liability Amounts on Freight Claims
Within Canada and Mexico, carriers are responsible for a permanent dollar per pound rate – unless the two parties had a prior agreement on a higher rate. Currently the rate in Mexico is fixed at 2.8 ¢/lbs, within Canada, the rate is $2 CAN/lbs. If the carrier is found liable within the United States, the carrier is responsible for the actual value of the lost or damaged freight.
9. Keep Copies of All Records
For convenience, refer to this checklist if you received damaged freight:
- Copies of photos depicting the damage
- A copy of the packing slip
- Bill of Lading copy
- Paid freight bill copy
- A copy of the invoice showing the price paid for the damaged goods received
- A standardized claim form which identifies the shipment and the states the claim amount.
Once all the records and documents are compiled, put them in an appropriate folder and keep it where you’ll have quick yet secure access to it. With an overabundance of precise evidence available, you serve yourself in strengthening your claim.
Remember, Receiving Damaged Freight Is Just Another Process
You will inevitably receive damaged freight, you’ll likely be annoyed, frustrated and frustrated. But logically, think of it as a part of doing business, have a process in place to accommodate the disruption – a plan B.
Managing your freight claims efficiently can save you both time and money. Document everything and understand the process. File your claim as soon as possible and be sure that you know how the freight claims procedures work according to your contract with your carrier.
Follow the steps and you can make the normally difficult situation of receiving damaged freight as stress-free as possible.